B-154275, JUL. 1, 1964

B-154275: Jul 1, 1964

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S. LANKFORD AND SONS: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED MAY 22. YOU STATE THAT YOU HAVE HEARD THAT CHOCTAW MFG. ARE COMMONLY OWNED AND/OR CONTROLLED COMPANIES MAKING THEIR BIDS NON-RESPONSIVE UNDER ARMED SERVICES PROCUREMENT REGULATION. INVITATION FOR BIDS DSA-1-64-1052 WAS ISSUED ON APRIL 30. THE INVITATION WAS ISSUED "UNRESTRICTED" FOR THE MANUFACTURE OF 275. CALIFORNIA 15324 NINE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. WAS THE LOW BIDDER. WAS FOR THE TOTAL QUANTITY OF 275. WAS THE SECOND LOW BIDDER. WAS FOR THE TOTAL QUANTITY OF 275. LANKFORD AND SONS WAS THE THIRD LOW BIDDER. WAS UNCLEAR AS TO THE MAXIMUM QUANTITY BID UPON. THE CONTRACTING OFFICER WAS ADVISED BY HIS ATTORNEY THAT THE GOVERNMENT WAS AT LIBERTY TO CONSIDER YOUR BID FOR AWARD AT A UNIT PRICE OF $2.11 EACH ON A NET BASIS FOR A MINIMUM QUANTITY OF 143.

B-154275, JUL. 1, 1964

TO T. S. LANKFORD AND SONS:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED MAY 22, 1964, PROTESTING AWARD OF A CONTRACT UNDER DEFENSE SUPPLY AGENCY INVITATION FOR BIDS NO. DSA-1-64-1052. YOU STATE THAT YOU HAVE HEARD THAT CHOCTAW MFG. CO., INC., AND U AND W MFG. CO. ARE COMMONLY OWNED AND/OR CONTROLLED COMPANIES MAKING THEIR BIDS NON-RESPONSIVE UNDER ARMED SERVICES PROCUREMENT REGULATION.

INVITATION FOR BIDS DSA-1-64-1052 WAS ISSUED ON APRIL 30, AND OPENED ON MAY 21, 1964. THE INVITATION WAS ISSUED "UNRESTRICTED" FOR THE MANUFACTURE OF 275,040 PAIRS OF ENLISTED MEN'S WHITE TROUSERS TO BE DELIVERED FOB DESTINATION AS FOLLOWS:

TABLE

DESTINATION QUANTITY

1A NSD, MECHANICSBURG, PENNSYLVANIA 100224

1B ATLANTA ARMY DEPOT 16272

1C UTAH ARMY DEPOT 143220

1C NSC, OAKLAND, CALIFORNIA 15324

NINE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. ON THE BASIS OF THE BIDS RECEIVED AND READ AS OF THE TIME OF BID OPENING, CHOCTAW MFG. CO., INC., P.O. BOX 125, SILAS, ALABAMA, WAS THE LOW BIDDER. CHOCTAW'S BID DATED MAY 18, 1964, AND TELEGRAPHIC MODIFICATION DATED MAY 21, 1964, WAS FOR THE TOTAL QUANTITY OF 275,040 UNITS AT A UNIT PRICE OF $1.9822 WITH A PROMPT PAYMENT DISCOUNT OF 1/10 OF 1 PERCENT--- 20 DAYS. U AND W MFG. CO., INC., 1410 WATER AVENUE, SELMA, ALABAMA, WAS THE SECOND LOW BIDDER. U AND W'S BID DATED MAY 7, 1964, AND TELEGRAPHIC MODIFICATION DATED MAY 21, 1964, WAS FOR THE TOTAL QUANTITY OF 275,040 UNITS WITH A MINIMUM QUANTITY OF 50,000 UNITS ON A COMBINATION OF ALL DESTINATIONS AT A UNIT PRICE OF $2.03 WITH A PROMPT PAYMENT DISCOUNT OF 1/10 OF 1 PERCENT--- 20 DAYS. T. S. LANKFORD AND SONS WAS THE THIRD LOW BIDDER. LANKFORD'S BID DATED MAY 15, 1964, WITH TELEGRAPHIC MODIFICATION DATED MAY 21, 1964, WAS UNCLEAR AS TO THE MAXIMUM QUANTITY BID UPON. IN AN OPINION RENDERED MAY 27, 1964, THE CONTRACTING OFFICER WAS ADVISED BY HIS ATTORNEY THAT THE GOVERNMENT WAS AT LIBERTY TO CONSIDER YOUR BID FOR AWARD AT A UNIT PRICE OF $2.11 EACH ON A NET BASIS FOR A MINIMUM QUANTITY OF 143,220 AT DESTINATION 1C ONLY (UTAH ARMY DEPOT) AND FOR A MAXIMUM QUANTITY OF 275,040 UNITS AT ALL DESTINATIONS.

YOUR TELEGRAM DOES NOT STATE WHICH ASPR PROVISION IS BEING VIOLATED BY THE SUBMISSION OF BIDS BY THE CHOCTAW AND U AND W COMPANIES AND THIS OFFICE IS UNAWARE OF ANY ASPR PROVISION WHICH WOULD MAKE BIDS SUBMITTED BY TWO COMPANIES WHICH ARE FAMILY OWNED NONRESPONSIVE BY REASON OF THAT CIRCUMSTANCE ALONE. IT IS ASSUMED, HOWEVER, THAT YOUR PROTEST IS WITH REFERENCE TO ASPR 1-111.2, RELATING TO NONCOMPETITIVE PRACTICES. UNDER THAT PROVISION CONTRACTING OFFICERS ARE REQUIRED TO REPORT PRACTICES, IN ACCORDANCE WITH DEPARTMENTAL PROCEDURES, WHICH ARE DESIGNED TO ELIMINATE COMPETITION OR RESTRAIN TRADE AND WHICH MAY EVIDENCE POSSIBLE VIOLATIONS OF SUCH LAWS. EXAMPLES OF SUCH PRACTICES SET FORTH IN THE ASPR ARE COLLUSIVE BIDDING, FOLLOW-THE-LEADER PRICING, ROTATED LOW BIDS, UNIFORM ESTIMATING SYSTEMS, SHARING OF THE BUSINESS, IDENTICAL BIDS, ETC.

BOTH CHOCTAW MFG. CO., INC., AND U AND W MFG. CO., INC., HAVE SUBMITTED A QUALIFICATION QUESTIONNAIRE FOR PLACEMENT ON QUALIFIED MANUFACTURERS LIST (QML), DCTSC FORM 445-1 THROUGH 7, WHICH SHOWS THEIR CORPORATE STRUCTURE. FAMILY RELATIONSHIP IS CLEARLY SHOWN IN THAT R. M. UTSEY AND NELL UTSEY, PRESIDENT AND VICE-PRESIDENT RESPECTIVELY, AND DIRECTORS OF CHOCTAW ARE THE PARENTS OF JAMES UTSEY WHO IS PRESIDENT OF U AND W. FURTHER, R. M. UTSEY IS A DIRECTOR OF U AND W AND CHOCTAW'S DUN AND BRADSTREET REPORT DATED SEPTEMBER 5, 1962, SHOWN THAT R. M. UTSEY IS ACTUALLY INDIRECTLY IN CHARGE SINCE HIS SON WAS SET UP IN THE BUSINESS BY HIM. THE RECORD SHOWS FURTHER THAT BOTH JAMES C. UTSEY AND DAVID H. WALLACE, U AND W'S SECRETARY -TREASURER, WORKED UNTIL FEBRUARY 1960 FOR CHOCTAW AND WERE ACTIVE IN ITS MANAGEMENT.

WE HAVE HELD IN 39 COMP. GEN. 892, QUOTING FROM THE SYLLABUS, THAT:

"MULTIPLE BIDS SUBMITTED BY ONE INDIVIDUAL ON BEHALF OF TWO OR MORE COMPANIES DO NOT HAVE TO BE REJECTED WHEN SUCH BIDS ARE NOT SUBMITTED FOR THE PURPOSE OF CIRCUMVENTING A LAW, * * * FOR GAINING AN UNFAIR ADVANTAGE IN CASE OF AWARDS BY DRAWING LOTS, OR FOR ANY OTHER PURPOSE WHICH WOULD BE PREJUDICIAL TO THE UNITED STATES OR TO OTHER BIDDERS. 14 COMP. GEN. 168, MODIFIED.'

WE HELD FURTHER THEREIN THAT THE REJECTION OF TWO LOW BIDS SUBMITTED BY AFFILIATED COMPANIES FOR THE PURPOSE OF OBTAINING PARTIAL AWARDS FOR SUCH AMOUNT OF WORK AS EACH COMPANY COULD CAPABLY PERFORM, ON THE BASIS THAT MULTIPLE BIDS ARE LEGALLY OBJECTIONABLE, WOULD BE PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES AND, THEREFORE, SUCH BIDS MAY BE CONSIDERED FOR AWARD. NOTHING OF THIS DEROGATORY NATURE HAS BEEN FOUND OF RECORD IN THE PRESENT CASE.

IT IS THE ADMINISTRATIVE FINDING OF FACT IN THE PRESENT CASE THAT BIDS WERE NOT SUBMITTED BY ONE INDIVIDUAL ON BEHALF OF TWO COMPANIES BUT RATHER BY TWO DIFFERENT INDIVIDUALS ON BEHALF OF SEPARATE AND DISTINCT CORPORATE ENTITIES, EACH OF WHICH HAS SEPARATE MANUFACTURING FACILITIES. FURTHER, BOTH CHOCTAW AND U AND W ARE QML PRODUCERS AND WERE RESPONDING TO SEPARATE COPIES OF THE INVITATION SENT TO THEM. SINCE BOTH HAVE SEPARATE MANUFACTURING FACILITIES, BOTH HAVE LEGITIMATE REASONS FOR SUBMITTING BIDS ON BEHALF OF THEIR RESPECTIVE COMPANIES. THUS, WHILE WE RECOGNIZE IN PRINCIPLE THAT THE PRACTICE OF MULTIPLE BIDDING HAS INHERENT OBJECTIONABLE FEATURES REQUIRING CLOSE SCRUTINY OF THE SURROUNDING CIRCUMSTANCES, IT IS OUR FURTHER VIEW THAT ANY UNDESIRABLE ASPECTS CAN BE CONTROLLED AS APPEARS FROM THE PRESENT RECORD TO HAVE BEEN DONE IN THIS INSTANCE, THAT IS, BY MAKING EFFICIENT PREAWARD SURVEYS AND MAKING AWARDS TO THE BEST ADVANTAGE OF THE GOVERNMENT. A FURTHER AVAILABLE SAFEGUARD IS THAT OF DEFAULTING BIDDERS WHO ARE UNABLE TO UNDERTAKE WORK WHICH HAS BEEN AWARDED TO THEM.

SINCE THE RECORD REVEALS NO EVIDENCE TO INDICATE THAT THE BIDS SUBMITTED BY CHOCTAW AND U AND W VIOLATED THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM OR THAT THEIR RECEIPT WAS UNLAWFULLY PREJUDICIAL TO ANY OTHER BIDDER, YOUR PROTEST IS DENIED.